Zecco sent an email out to customers last Friday about a huge change in their account. It turns out that offering commission free stock trades is not a sustainable model and Zecco will be moving away from that as of March 30th, 2011. When I first learned about Zecco in mid-2007 and their offer of free stock trades, I was skeptical and wondered if Zecco was a scam  (it’s not). When they moved to require a minimum $25,000 balance in an account to get 10 free stock trades , I suspected that it was only a matter of time before free trades are gone.
Businesses can lower their bottom line when they operate online and online banks have proven this with their high interest savings accounts  for years. Unfortunately for brokers, stock trades aren’t free and there’s still a minimum cost associated with that transaction.
While Zecco hasn’t had the best reputation in terms of customer service (according to Smart Money ), it’s clear that they care because the CEO has been active in their forums . Unfortunately for them, their new pricing structure looks a lot like that of TradeKing , 7 spots higher on the Smart Money rankings. TradeKing also offers a $150 transfer fee reimbursement… that doesn’t bode well for those looking to jump off the Zecco ship.
Here was the email:
Thank you for being a Zecco Trading customer. I hope you’ve been enjoying the exciting improvements we’ve rolled out in the last few months.
When Zecco Trading first launched in 2006, our focus was to deliver a good, solid service at a bare bones price. In the four and a half years since that launch however, our customers’ needs have evolved quite a bit. While investors today certainly value low commissions, they also demand a great trading service with a rich set of advanced features.
So, we have been working hard to continuously improve the Zecco Trading experience. In just the last year or so we’ve introduced major improvements in our quotes and research offering as well as launched important new tools like Zecco Streamer, Zap Trade and the new Zecco Mobile iPhone app. We’ve also made substantial improvements in customer service and upgraded our core infrastructure to dramatically improve performance and reliability.
To better support this balance between offering remarkable value and continuing to deliver the innovative new technologies, tools and services that Zecco Trading customers require, we are modifying our commission structure. Starting on March 30, 2011, our new commission rates will be:
Equity trades: $4.95 per trade*
Options trades: $4.95 per trade, plus $0.65 per contract
With this change we are no longer offering 10 free trades per month. As before, there are no minimum balance requirements or inactivity fees to open or maintain a Zecco Trading account.
Under this new pricing structure, Zecco Trading’s pricing remains 30% to 50% lower than our competitors. I hope you agree that, when you consider the features, the quality customer service we provide, and the price, Zecco delivers the best value on the Stree